What Happens After You Sign Your Car Lease Deal

After you sign, your contract is sent by your dealer to the lease finance company for approval and processing. From this time on, any concerns or questions about your lease should be directed to the finance company, not your dealer. Go to your dealer only for issues related to your vehicle (service, warranty repairs, recalls, etc.).

If you’ve already leased prior to visiting LeaseGuide.com, you may want to find out how good — or bad — your deal was. The Lease Inspector, one of the features of the optional Lease Kit, will ask you to input the figures from your lease contract and then will tell you exactly what kind of deal you got.

A Deal Is a Deal

If it happens that you decide you’re not happy with your vehicle after you’ve signed your lease contract, there is no “grace” period or “3 day return policy”  in which you can cancel the deal. This is the same regardless of whether you buy or lease. Once the contract has been signed, it’s legal and binding. However, if you believe that mistakes have been made, contact the dealer and leasing company immediately.

If you absolutely must terminate your lease, the later you can wait, the better. Terminating early can be extremely costly. The Lease Termination Guide in the Lease Kit explains all your options and helps you to determine the best method.

Careful About Moving Your Leased Car

If you plan to move during the time of your lease, be aware that many lease contracts may restrict you in some way. Most prohibit moving their vehicles out of the country. Check the fine print in your contract.

If you move with your vehicle to another state (which is typically not a problem), your payments could change up or down due to different sales tax rates between states. Always notify your lease company when you move so that they can make the adjustments.

Hold Up Your Part of the Contract

Make sure you maintain your vehicle, keep the contract-specified amount of insurance, and make your payments promptly as specified in your contract. Purchase tags, registrations, and pay taxes as required by your local government. Don’t make modifications to your vehicle, or fail to repair damages. Don’t use the vehicle for illegal purposes, drive while intoxicated, or allow unlicensed drivers. Pay all fines and fees associated with the vehicle. Failure to do these things is a violation of your lease contract.

It’s best to maintain your vehicle according to the schedule in your vehicle’s owner’s manual. It’s not necessary to have the maintenance done by a dealer, but make sure it’s performed by a professional shop that does quality work. Always keep records in case there’s ever a question.

About Insurance Coverage For Your Leased Vehicle

All lease contracts require that you carry insurance on the leased vehicle, naming the lease company as “additional insured.” The level of coverage required may be more than you might otherwise carry on a vehicle of your own. Not to carry the specified amount of coverage is a violation of your contract. Typically, the amount of coverage is as follows:

  • Bodily Injury – not less than $100,000/$300,000 (single/multiple people)
  • Property Damage – not less than $50,000
  • Combined Bodily Injury/Property Damage – no less than $500,000 per accident
  • Deductibles – no more than $1000 for collision, no more than $1000 for comprehensive

Since leasing may require a greater amount of coverage than you might otherwise carry, you should shop at multiple insurance companies for the best rates.  The easiest and fastest way to get free rate quotes is directly from provider’s websites.
We recommend Liberty Mutual InsuranceAdvertisement and Esurance as two of the best for good rates and great customer service.

If You Have an Accident

In case of an accident, theft, or loss; you should immediately notify both your insurance company and the lease company. If the accident causes repairable damages, your insurance will pay for the repair of those damages, minus your deductible. Be sure to have the repairs done by a reputable shop that does quality work and uses “original equipment manufacturer” (OEM) parts. Otherwise, you may have to pay for the repairs to be done correctly when you return your vehicle to the lease company at lease-end.

If your vehicle is totally destroyed or stolen, the insurance company pays the lease company for the vehicle (remember, the vehicle belongs to them), minus the deductible, which you have to pay. The insurance only covers the current value of the vehicle, not the amount you still owe on your lease, which may be more. Unless you have GAP insurance, or your lease contract specifically lets you off the hook (see the small print in your contract), you have to pay the difference — possibly a large amount. Most modern lease contracts have a waiver clause that lets you off — but check yours to make sure.

Some states now have “diminished value” laws that require auto insurance companies to compensate vehicle owners for the lower resale value of the vehicle caused by an accident, even after repairs have been made. This payment should go to the lease company but, if you decide to purchase your vehicle at lease-end, the credit should come back to you. Contact your lease company to determine how they handle this potentially troublesome situation.

Watch Your Mileage

During your lease keep a watch on your mileage so that you won’t exceed your limit by the time your lease ends. If you have a 12,000 mile annual limit, for example, you should be driving no more than 1000 miles per month, on average, or a total of 36,000 miles for a 3 year lease.

If you find that you’re driving too many miles, try to take action to bring it back in line to avoid having to pay for the excess miles at lease-end. You could try swapping vehicles for a while with someone who doesn’t drive as much as you do. Or you could rent a vehicle to drive on vacation, rather than drive your leased vehicle. Or carpool to work. Or consolidate multiple short trips into one.

If you simply cannot stay within your mileage limits, just realize that automobile miles are not free, regardless of whether you’re leasing, buying, or renting. Terminating your lease because you know you’re exceeding your mileage limits is rarely ever a good decision. It’ll be expensive and you’ll still pay for miles you drive in any new vehicle you get. It’s best to simply acknowledge that you have to pay for the miles and begin putting money aside for the eventual lease-end payment. Of course, if you decide to purchase your vehicle at lease-end, you avoid mileage fees altogether.

You can use our Lease Mileage Calculator to help you manage your mileage.

What If You Get a Lemon

If you are unfortunate enough to get a vehicle that has never-ending problems and which can be classified as a “lemon,” be aware that lease contracts, just like purchase loans, don’t provide for returning the vehicle and getting your money back. However, most states, but not all, have lemon laws in place that apply to leased vehicles as well as purchased vehicles. Check with your state Attorney General’s office to find out how it works in your state.


For most people, car leasing is a problem-free, money-saving, and enjoyable experience. Most will choose to lease again with their next car. Many people who are leasing today have been happily leasing for many years.

People who have problems with leasing are generally those who didn’t understand how leasing works before they leased, didn’t do their homework, or simply were not good leasing candidates (e.g., drive too many miles per year). These people generally attribute their bad experience to the fact that, in their view, leasing is a “scam” or is a terrible way to finance a car.

Before we end our discussion on car leasing, let’s look briefly at a few things you may need to know about the end of a lease. Read the next, and final, topic: End of Lease Options.


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